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CME Plans Bitcoin Trading: World’s Biggest Futures Exchange to Offer BTC?

Last Updated Yesterday
Teuta Franjkovic
Last Updated Yesterday
By Teuta Franjkovic
Verified by Peter Henn

Key Takeaways

  • CME Group, the world’s largest futures exchange, plans to launch Bitcoin trading.
  • This move could be a major step for Wall Street into digital assets.
  • CME already dominates Bitcoin futures due to growing institutional adoption.

CME Group, the largest futures exchange in the world, is reportedly planning to introduce Bitcoin trading .

Based in Chicago, the group is currently in discussions with traders interested in buying and selling cryptocurrency through a regulated marketplace, as three individuals familiar with the negotiations reported .

CME Considers Spot BTC Trading, Embracing Crypto Mainstream

Althoughplans are still being finalized, this move would represent a significant step by major Wall Street institutions into crypto. This follows the United States Securities and Exchange Commission’s (SEC) approval of spot Bitcoin exchange-traded funds (ETFs) in January.

Introducing spot Bitcoin trading alongside existing Bitcoin futures on CME would make it easier or investors to take part in basis trades. This approach, a key feature of the US Treasury market, involves borrowing money to sell futures while buying the underlying asset. This, in turn, lets people capitalize on the slight price differences between the two. The majority of Treasury basis trading occurs on CME venues.

Some of the world’s largest financial institutions have pivoted from skepticism about Bitcoin to accepting, or even advocating for, BTC.

Reasons for this change of hear include:

  • The sharp rebound of Bitcoin from its 2022 lows to record highs earlier this year.
  • Increasing recognition among investors of Bitcoin as a tradable asset.
  • Enhanced regulatory oversight reducing illegal market activities.

CME told CCN that CME Group does not comment on market rumour or speculation.

Dominating Bitcoin Futures as Institutional Adoption Soars

Despite the token losing one-fifth of its value since reaching a peak above $73,000 in March, spot Bitcoin ETFs have become the fastest-growing ones in history.

Hedge funds, such as Bracebridge Capital, and pension funds, including the Wisconsin Investment Board, have invested over $10 billion in assets into funds. These, in turn, are manage by such prominent asset managers as BlackRock, Fidelity, and Ark. In March, BlackRock CEO Larry Fink expressed  a “long-term bullish” outlook on Bitcoin.

CME has significantly benefited from this surge of institutional interest. It has risen past Binance to become the world’s largest Bitcoin futures market. This shift is largely due to traders capitalizing on the volatility of Bitcoin.

Catering primarily to hedge funds and proprietary traders, CME currently maintains about 26,000 open positions, valued at approximately $8.5 billion, in its Chicago market. This is more than double the amount recorded a year ago.

CME’s Spot BTC Trading Launch in Switzerland Faces Mixed Reception

CME’s potential spot trading operation is planned to be hosted through the EBS currency trading venue in Switzerland , a country known for its stringent regulations on the trading and storage of crypto assets, according to sources.

The track record of large traditional exchange operators entering the spot cryptocurrency market has been mixed. For instance, Deutsche Börse recently launched its own digital assets market . However, CBOE Global Markets, a direct competitor of CME based in the same city, announced last month  that it would shut down its spot market business due to unclear American regulations.

A crypto trading executive expressed skepticism about CME’s ability to gain significant market share with its Bitcoin trading operations split between CME in Chicago and EBS in Switzerland. They noted potential inefficiencies in such a setup. However, they also pointed out that the major advantage of CME’s move into crypto was the growing comfort of large, regulated exchanges with the infrastructure needed for trading digital assets, particularly the secure storage of coins.

This development could lead to exchanges soon accepting crypto-related collateral, such as tokenized money market funds. This, therefore, could help make margin calls more timely, according to the executive.

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